ASIC’s A$14M Capital Floor Could Push Small Australian Crypto Exchanges Out of the Market
ASIC has proposed capital requirements of up to A$14 million for crypto exchanges and custodians, with a low-cost custody concession as the survival path for smaller operators. Tax reporting to the ATO begins July 2027.
Australia’s corporate regulator has proposed capital requirements of up to A$14 million for cryptocurrency exchanges and custodians, a floor that smaller operators may struggle to meet.
The Australian Securities and Investments Commission released the package in a media release on October 15, opening consultation on how to implement the Corporations Amendment (Digital Assets Framework) Act 2026, which passed in April and takes effect in 2027. Submissions close November 27, and final guidance is expected in March 2027.
The paper, Consultation Paper 392, sets out three capital models. Under the first, operators without a third-party custody concession would need net tangible assets of at least A$14 million, or 10% of average revenue if that is greater. A second model lowers the floor to A$7 million for platforms holding only assets that are not financial products. A third starts at A$2 million, with additional requirements tied to asset holdings, revenue and activities such as brokerage, trading venue operation and dealing directly with clients.
The concession path is where smaller firms may survive. Operators using qualifying independent custodians would face a starting requirement of A$200,000, but the actual figure is the highest of three tests: that amount, 0.5% of the average value of assets held in custody (capped at A$7 million), or 10% of average revenue. Overseas custody arrangements remain permitted, so exchanges can use international service providers rather than hold customer assets in Australia.
The structure rewards outsourcing. A boutique exchange running its own wallets faces the A$14 million test; the same firm handing custody to an institutional provider starts at A$200,000. That points Australian market structure toward a small number of licensed custodians servicing many platforms, with the compliance cost absorbed by whoever keeps the keys.
ASIC Commissioner Alan Kirkland said the proposals acknowledge the growing role of digital assets in traditional finance. “Our proposed guidance and standards acknowledge the increasing role of digital assets and tokenization, including in traditional parts of the financial system.”
Beyond capital, the paper proposes quarterly reporting of wallet arrangements and addresses, stricter reconciliation of customer assets, controls over how platforms use entrusted assets, and best-execution rules requiring intermediaries to access at least two adequate liquidity sources. Stablecoins issued, controlled or held by licensees or their related entities would not count toward capital.
The capital rules sit alongside a separate reporting obligation. Platforms serving Australian customers are slated to report transactions to the Australian Taxation Office from July 2027 under the OECD Crypto-Asset Reporting Framework, with the first reports targeted for 2028. The tax office still describes those reporting rules as announced policy awaiting enactment. ASIC’s licensing regime for digital asset platforms takes effect April 9, 2027.
Industry interest is already substantial: ASIC has recorded more than 140 applications for digital asset-related financial services, over 110 of them filed during a transitional relief period that ended in September.
